Originally published in MBA NewsLink // November 21, 2021
With every new technological advancement and update, there will be early adopters, latecomers, and questions about how innovation will alter the status quo. One of the most powerful examples of this was the shift in the early 2000s in how consumers bought and listened to music. Back then, CDs and record stores were nearly ubiquitous, but as advances in technology and improvements in internet speed made streaming an easier and more viable option, consumers quickly adapted to this new reality, triggering a seismic shift in the music industry.
The closest analogy in the mortgage world is the rise of remote online notarization. While it originally took some time for the mortgage and real estate industries to widely embrace RON, once the technology began to take off in 2020, there was almost no turning back. However, a recent announcement from the GSEs left many lenders questioning some RON logistics and the ease with which RON fits into their existing infrastructure.
Both Fannie Mae and Freddie Mac have updated their selling guides to state that lenders must retain the audio-video recording of the RON transaction for the greater of either (a) the minimum period required by the state in which the notary is licensed or (b) 10 years. This guideline has left a lot of lenders wondering just how to store all that audio-video footage…and spurred a new crop of vendors ready to meet this “need.”
Of course, this isn’t 2003, and storing RON video files that could be several gigabytes in size is not as simple as burning a .mp3 file onto a CD. A much more apt analogy would be uploading old CDs to the iTunes cloud and then having streaming access via the Apple Music Library. This eliminates the need to physically store and retain content while still maintaining on-demand access.
Similarly, lenders using RON don’t need to maintain their own secure server rooms to ensure the audio-video recordings have been properly stored – they just have to ensure they’ve chosen a RON provider with that capability. Luckily, any RON provider that has obtained its Mortgage Industry Standard Maintenance Organization RON Certification will possess that capability as the MISMO RON Standards require the RON system to:
- Facilitate the process of collecting the required Notarial Records;
- Provide a method by which a Notary can access and/or export the Notarial Records; and
- Provide automated backup of the Notarial Records and audio/video recording to ensure redundancy.
Just like the music industry has evolved from a time when we would purchase records and then only be able to listen to the music when there was access to both the record and a record player to its current state that allows us to download or stream music from the cloud and listen to it whenever and wherever we please, digital storage has also evolved. We are no longer required to store files on floppy discs, CDs or jump drives; rather we can easily upload files to the cloud ourselves and access them whenever and wherever needed. Just like iTunes stores music for listeners rather than requiring them to store it themselves, RON providers also store the audio-video recordings of RON transactions instead of requiring lenders to do so.